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The current price per share of XYZ company, which is traded on the New York Stock Exchange, is $100
The current price per share of XYZ company, which is traded on the New York Stock Exchange, is $100. At that price, the total quantity of shares demanded is 1,000 and the total quantity supplied for trade is 1,500. It follows that
a. $100 is the equilibrium price per share.
b. there will be downward pressure on the price of shares of the XYZ company.
c. there will be upward pressure on the price of shares of the XYZ company.
d. there is a shortage of shares of the XYZ company on the stock exchange.
Expert Solution
The answer is b. there will be downward pressure on the price of shares of the XYZ Company.
If the supply is more than the demand, there is a surplus in the market, and in this scenario, there will always tendency of the price to move downwards. The quantity supplied is more than the quantity demanded at the price of $100, there will be downward pressure on the price of shares of the XYZ Company.
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